Bryon Industries manufactures 20,000 components per year. The manufacturing cost of the components was determined as follows:
Direct materials $120,000
Direct labor $150,000
Variable overhead $60,000
Fixed overhead $100,000
An outside supplier has offered to sell Byron the component for $17. If Bryon purchases the component from the outside supplier, fixed costs would be reduced by $20,000. The manufacturing facilities would be unused and could be rented out for $10,000. Should Byron accept the offer?
a) Yes, because the differential costs decrease by $20,000.
b) No, because the differential costs increase by $20,000.
c) No, because the differential costs increase by $10,000.
d) Yes, because the differential costs decrease by $10,000.